How to become financially secure.
ascan wrote:
Xelebes wrote:
Realistically, if you want a secure yourself for a long 20-year term, it's best to purchase bonds and stocks. In volatile times, bonds are preferred. In stable times, stocks are more favourable.
I did mention ETFs, Xelebes. ETFs are a convenient way for an individual to get exposure to stocks, commodities, corporate and government bonds. But if you've just a few £k to invest, then if you consider what's happened during 2008, you're safer with cash in a savings account with a bank that has some government protection until we know exactly where things are going. Longterm you're right based on relatively recent US/UK historical data (since WW2, I think). However, as far as stocks go, I think there's some debate about how relevant that may now be. You can look at Japan as an example. If you had investments in stock that mirrored the Nikkei 225 that you bought something like 20 years ago, that investment, would be worth less today. Dividend payments may have helped, a little, I suppose, and of course they've had problems with deflation, but the point is you'd have probably been better off in cash if you were only investing a relatively small amount. Check it out here:
[url]http://uk.finance.yahoo.com/echarts?s=%5EN225#chart4:symbol=^n225;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined[/url]
Anyway, I don't think that's the most likely scenario longterm in the US/Uk. But it's worth considering.
It's best to keep some liquidity (cash) available for that rainy day but once you have that rainy day fund established, I would personally go with debt securities (I have no idea what ETFs are) as they are more for steady incomes. In a deflationary market, bonds and treasury notes are harder to obtain for differing reasons. Bonds because it is more expensive to issue them and treasury notes because people are converting their illiquid assets into more liquid assets, causing a squeeze. With bonds, the stated returns are less, despite the scarcity, but only because their real returns are higher.
Just the accounting student inputting some words.
jawbrodt wrote:
I'm still searching for the best method. I'll let everybody know when I find it. Right now, it's playing the lottery.
What do you mean when you find it? You have already found my thread.
Also buying lottery tickets is counter productive.
_________________
Unfortunately being human is a genetic disorder, and ultimately fatal.
MindOfOrderedChaos wrote:
I have been reading alot lately in books etc. On how to try and slowly attain more money even in my finacally challenged state.
I have come accross some interestingly simple rules that I am beginning to try and follow to do with money management.
1. Track your money. Know how much you spend and on what.
Go through and work out what you spend your money one each week. Where does it all go? Note down each transaction for 2 weeks should help you figure it out.
2. Live on 90% or less of your income.
Each week I put away a set amount as savings to build up for the future. By saving 10% before you use your money each week you will hardly even notice the difference. But the rewards will be substantial.
This calculator should help you work out just how rewarding it can be over a certian period of time...
http://www.sorted.org.nz/calculators/re ... /page1.php
Lets say $50 per week at 6% interest for 20 years. Now thats going to be a bloody nice stock pile of money!
3. Trim your living expenses. Decide what you really need and what you could do with out.
Lets say do you really need takeaways twice a week or that extra can of coca cola etc.
4. Target. Set realistic goals for where you want your finaces to be.
Lets say you decide you are going to save $50 a week for 10 years and put it in savings. That is a target.
[b]5. Train. Read etc. Learn about the power of compound interest, investment stratagies and real estate.[b]
I hope you guys understand what i'm on about. And if this helps even one person i will be happy I wrote it. Let me know your thoughts and opionins and if you decide to actually follow this plan let me know.
Have a happy new years and good luck with any new years resolutions you may have .
I could have a go.. when I get some employment it'd work great
I have come accross some interestingly simple rules that I am beginning to try and follow to do with money management.
1. Track your money. Know how much you spend and on what.
Go through and work out what you spend your money one each week. Where does it all go? Note down each transaction for 2 weeks should help you figure it out.
2. Live on 90% or less of your income.
Each week I put away a set amount as savings to build up for the future. By saving 10% before you use your money each week you will hardly even notice the difference. But the rewards will be substantial.
This calculator should help you work out just how rewarding it can be over a certian period of time...
http://www.sorted.org.nz/calculators/re ... /page1.php
Lets say $50 per week at 6% interest for 20 years. Now thats going to be a bloody nice stock pile of money!
3. Trim your living expenses. Decide what you really need and what you could do with out.
Lets say do you really need takeaways twice a week or that extra can of coca cola etc.
4. Target. Set realistic goals for where you want your finaces to be.
Lets say you decide you are going to save $50 a week for 10 years and put it in savings. That is a target.
[b]5. Train. Read etc. Learn about the power of compound interest, investment stratagies and real estate.[b]
I hope you guys understand what i'm on about. And if this helps even one person i will be happy I wrote it. Let me know your thoughts and opionins and if you decide to actually follow this plan let me know.
Have a happy new years and good luck with any new years resolutions you may have .
_________________
Thanks Tinkerbell.
Allegedly away with the fairies for 6-7 years
Xelebes wrote:
...(I have no idea what ETFs are)...
Most accountants wouldn't need to know what an ETF was, however most US citizens with investments would be able to tell you. Basically it's a fund that can be traded on a stock exchange. It's designed so that it's priced relative to an index or commodity price so that if that index moves, say, 2%, then so does the ETF. You also benefit from the dividend payments. They do a similar thing with corporate and government bonds. It's got the advantage that if you want a diverse range of investments, you don't waste money on commission, as when you sell or buy an ETF that's charged as one trade, rather than numerous if you bought the individual components. There's also no stamp duty (type of tax) on them in in the UK.
As far as what else you said goes and rainy days, currently this is a monsoon. Also, what you learn that's applicable to company finance, isn't necessarily so with regards personal finance. It does put you in a better position to understand it, though. Most individuals have much smaller amounts of money, and different legislation generally applies to consumers compared to companies. For example, most individuals depositing cash would be protected by the FDIC in the US. Businesses, though would generally have cash amounts that exceeded the guarantee limit. With that protection, I assume it would be better for an individual with a few $K to put their money with a bank, rather than government bonds. Obviously for sums that exceed the FDIC guarantee then US government bonds would be best if you're minimising risk. Note I'm considering protecting what you've got, rather than getting income from it.
Anyway, what I'm outlining is just what I've learnt from reading and investing myself, so feel free to correct me if you wish. I think the important thing is that at the moment things are very uncertain and if you get it wrong you can lose shed loads of money. So, for someone who's not already invested, with a relatively small sum, cash in a savings account is the best bet. Certainly if you've a larger sum and hold a certain view of where we're going, there's nothing wrong with your strategy. At your age, if you're a gambler, put £10k in an ETF invested in some of the biggest chinese companies and that may set you up nicely for retirement... but that's far from a certainty.
Edit: Just noticed you're Canadian. I was assuming you were from the US, but it doesn't make much difference.
That's funny.
I'm currently saving more like 90% of what I earn and spending about 10% at the most. Then again, I am at home or college (payed for by my parents) so I don't have much living expenses.
I think I only spent about $2000 in total all year in 2008. Which probably explains why I have no decent clothes except the 3 teeshirts I picked up for about $2 or $3 each.
_________________
Into the dark...
sunshower wrote:
That's funny.
I'm currently saving more like 90% of what I earn and spending about 10% at the most. Then again, I am at home or college (payed for by my parents) so I don't have much living expenses.
I think I only spent about $2000 in total all year in 2008. Which probably explains why I have no decent clothes except the 3 teeshirts I picked up for about $2 or $3 each.
I'm currently saving more like 90% of what I earn and spending about 10% at the most. Then again, I am at home or college (payed for by my parents) so I don't have much living expenses.
I think I only spent about $2000 in total all year in 2008. Which probably explains why I have no decent clothes except the 3 teeshirts I picked up for about $2 or $3 each.
Wow thats a really good habit to get into. One day you maybe richer than us all..... If you aren't already
_________________
Unfortunately being human is a genetic disorder, and ultimately fatal.
MindOfOrderedChaos wrote:
sunshower wrote:
That's funny.
I'm currently saving more like 90% of what I earn and spending about 10% at the most. Then again, I am at home or college (payed for by my parents) so I don't have much living expenses.
I think I only spent about $2000 in total all year in 2008. Which probably explains why I have no decent clothes except the 3 teeshirts I picked up for about $2 or $3 each.
I'm currently saving more like 90% of what I earn and spending about 10% at the most. Then again, I am at home or college (payed for by my parents) so I don't have much living expenses.
I think I only spent about $2000 in total all year in 2008. Which probably explains why I have no decent clothes except the 3 teeshirts I picked up for about $2 or $3 each.
Wow thats a really good habit to get into. One day you maybe richer than us all..... If you aren't already
I wish.
I must plan and scheme so that I can earn more per hour out of the time I put into jobs, and thus save up enough to begin investment, probably in property as my parents have lots of experience in that area and I can utilize their advice and skills. Currently I am working 3 jobs, but as I am a casual worker (due to the fact that I am on uni holidays, and i move back south into college again in a month or two) I still don't get a lot of hours.
_________________
Into the dark...
ascan wrote:
Xelebes wrote:
...(I have no idea what ETFs are)...
Most accountants wouldn't need to know what an ETF was, however most US citizens with investments would be able to tell you. Basically it's a fund that can be traded on a stock exchange. It's designed so that it's priced relative to an index or commodity price so that if that index moves, say, 2%, then so does the ETF. You also benefit from the dividend payments. They do a similar thing with corporate and government bonds. It's got the advantage that if you want a diverse range of investments, you don't waste money on commission, as when you sell or buy an ETF that's charged as one trade, rather than numerous if you bought the individual components. There's also no stamp duty (type of tax) on them in in the UK.
As far as what else you said goes and rainy days, currently this is a monsoon. Also, what you learn that's applicable to company finance, isn't necessarily so with regards personal finance. It does put you in a better position to understand it, though. Most individuals have much smaller amounts of money, and different legislation generally applies to consumers compared to companies. For example, most individuals depositing cash would be protected by the FDIC in the US. Businesses, though would generally have cash amounts that exceeded the guarantee limit. With that protection, I assume it would be better for an individual with a few $K to put their money with a bank, rather than government bonds. Obviously for sums that exceed the FDIC guarantee then US government bonds would be best if you're minimising risk. Note I'm considering protecting what you've got, rather than getting income from it.
Anyway, what I'm outlining is just what I've learnt from reading and investing myself, so feel free to correct me if you wish. I think the important thing is that at the moment things are very uncertain and if you get it wrong you can lose shed loads of money. So, for someone who's not already invested, with a relatively small sum, cash in a savings account is the best bet. Certainly if you've a larger sum and hold a certain view of where we're going, there's nothing wrong with your strategy. At your age, if you're a gambler, put £10k in an ETF invested in some of the biggest chinese companies and that may set you up nicely for retirement... but that's far from a certainty.
Edit: Just noticed you're Canadian. I was assuming you were from the US, but it doesn't make much difference.
So ETF stands for Equity Trading Fund? Sorry, I have never even heard of the acronym. I've only ever heard that as a phrase.
Quote:
jawbrodt wrote:
I'm still searching for the best method. I'll let everybody know when I find it. Right now, it's playing the lottery.
What do you mean when you find it? You have already found my thread.
Sorry, I'm more of a gambler. I need something with a higher return than normal investments. Right now, I'm looking into rare coins and precious metals.
_________________
Those who speak, don't know.
Those who know, don't speak.